Public Provident Fund: The government of India recently revised interest rates for small savings schemes including the Public Provident Fund (PPF). If you wish to retire early, PPF is one of the instruments that will help you do that easily. If you start investing in PPF account at the age of 25, you can accumulate liquid wealth over Rs 1 crore by the time you reach the age of 50. All you will have to do is invest a little over Rs 1 lakh per year. Moreover, you can also get a tax rebate on the investment.
PPF: How to get Rs 1 crore
The current rate of interest on PPF is 8%, which is compounded annually. You will have to invest Rs 1,17,000/year for 25 years to get around Rs 10,038,938. The interest rate is revised by the government quarterly and shared with the public through a gazette notification. Considering the fact that crores of people are invested in PPF, the interest rate on this scheme would not be reduced drastically. You can invest the maximum Rs 1.5 lakh/month in the PPF account.
PPF calculator: It is easy to calculate return on your PPF investment. Several online websites, including the ICICI Bank, provide easy-to-use online calculators. There are several free online compound interest rate calculators available for use.
PPF withdrawal, loan rules: You can get loan on your PPF account after completion of one financial year, after end of the year during which the first subscription was made. As much as 50 per cent of the balance can be withdrawn after the expiry of five years, excluding the first financial year.
Full withdrawal can be made after 15 years after the end of the year in which the account was opened. The PPF account has a lock-in period of 15 years. The account can be extended further one or more blocks of five years without loss of interest on written request within 1 year from the date of maturity.
During the extended period, you can opt for not making fresh deposits, or make partial withdrawals. For extending the account without fresh deposit, you need not inform the Account Office as it will be considered extended automatically and eaern interest on the balance available in the account.
If you want to make fresh contribution, it is important to intimate the Account office before the end of the year through Form H. However, the tax benefits will not be applicable to deposits made after 15 years untill you submit extention request through Form H.